Industry prefers market-based plan

Some of the world’s largest mining companies, comprising Australia’s biggest emitters of greenhouse gases, support a well-designed carbon price, a Senate inquiry was told.

The Australian Aluminium Council told the opposition-dominated Senate select committee into the new carbon tax that a market-based pricing mechanism was a better option than the “direct action" method proposed by Opposition Leader
Tony Abbott
.

Executive director Mike Prosser said the council’s 12 members – including Rio Tinto, Alcan, BHP Billiton, Worsley Alumina, Alcoa Australia and Capral Aluminium – were responsible for emitting about 40 million tonnes of carbon dioxide a year. “The issue for us is the next level of detail," Mr Prosser said, referring to speculation of a $20 to $40-a-tonne price on carbon. “A carbon pollution reduction scheme, with some modifications, is an approach we could work with."

Large aluminium processors were prepared to pay a carbon price from next year but did not want the price to rise any further until China and other international competitors paid a similar price, he said. Mining companies already paid $40 a tonne in renewable energy target costs, compared with $8 a tonne paid by Chinese competitors, he added.

The council argued that a swiftly rising carbon price would compound existing inequities in environmental costs between Australian and foreign miners. If the federal government allowed the carbon tax to rise without waiting for China and other nations to increase their carbon prices, there would be little environmental benefit because companies would just shift their production and emissions from Australia to China, he said.

Other industry bodies, including the National Farmers Federation and the Australian Chamber of Commerce and Industry, reiterated their opposition to any tax plan without an international agreement.

The Federal Chamber of Automotive Industries has estimated it will cost the automotive industry between $30 million and $84 million a year, depending on compensation arrangements. For a mid-size Australian car, this could represent between $121 and $215 a car in extra costs even after compensation.

The chamber warned the high-value industry had very tight profit margins and the extra cost could drive some manufacturing overseas.

Related Quotes

Company Profile

“The automotive industry operates in a highly competitive international market and is likely to have little or no ability to pass on any additional cost burden," the chamber said in a submission to the inquiry. “Manufacturers are likely to source components from international markets to avoid incurring a carbon price within automotive products."